Travel’s Increasing, So Why Aren’t Travel Stocks?

    Last week we shared that demand for short-term rentals and travel in general is trending updwards. So why according to this Barron’s article, Travel Is Recovering But Travel Stocks Aren’t, are travel stocks not doing the same?

    A few highlights from the article:

    • Increased profits for airlines and hotels recently
    • Increased number of travelers
    • Travel stocks trending downward due to broader economic uncertainty
    • Impact of slower economic pace in Eastern Europe and Asia puts a strain on travel stocks
    • Stock investors may shift away from the travel industry as a whole to invest in specific travel stocks

    A quote by Yardeni Research that stood out in the article stated, “Someone’s wrong. Either industry analysts are too optimistic in their estimates or investors [are] too pessimistic about valuations.”

    Right now, we could be at a cross road where the travel demand is not reflecting in travel stocks as a whole.

    What To Do?

    Similarly to investing in real estate through short-term rentals, there is a macro and micro view. The macro view is the short-term rental industry as a whole while the micro view focuses on short-term rentals in a specific market. There can be variability between the two.

    Like the article points out, there is a macro and micro view of travel stocks. The macro view shows that stocks related to travel as a whole are down, like the Dow Jones U.S. Travel & Tourism Index, yet the micro view shows some individual travel stocks are up.

    There are a lot of factors at play on the global level and could be some hesitancy that analysts have overpredicted upcoming travel numbers. It appears that stock investors aren’t quite ready to jump on the wagon of optimism yet.

    It may be worth looking into travel stocks as a whole vs. individual stocks to find out what may work best for your investment goals.

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